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A collective good is one that is


A) to a degree nonrival but is excludable.
B) rival but to a degree nonexcludable.
C) consumed by more than one person.
D) to a degree both nonrival and nonexcludable.

E) A) and B)
F) B) and C)

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A patch of edible mushrooms growing wild in a national forest is a ____ good.


A) public
B) private
C) pure public
D) commons

E) A) and B)
F) A) and C)

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Pork barrel spending is


A) government spending that involves agriculture.
B) legislation that costs less than the total benefits but lacks political support.
C) another name for all spending by the government.
D) legislation that significantly benefits a particular group of voters but costs more than the benefits to all voters.

E) B) and D)
F) All of the above

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The deadweight loss from imposing a tax on a market without an externality is


A) always justified.
B) justified if the tax revenue creates a larger surplus gain from the provision of a public good.
C) never justified.
D) trivial in size.

E) B) and D)
F) B) and C)

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Assume that each day ten thousand children watch Sesame Street on public television and that the educational benefits of watching Sesame Street generate private benefits of $100 per child per year and a positive externality of $50 per child per year.No products are advertised on Sesame Street but once a year the stations hold a pledge drive.During pledge drives viewers are asked to make voluntary contributions to the public station in order to keep the programming viable. If the public television stations collect less than $100 per child during the pledge drives it is evidence that


A) the government subsidy is too high.
B) viewers do not take externalities into account when making a donation.
C) some viewers are free riders.
D) viewers do not value Sesame Street as much as originally estimated.

E) A) and C)
F) A) and B)

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A public good that would benefit Karen,Tammy,and Max has a one time installation cost of $900.These three voters must approve any tax plan by simple majority and all three will cast a vote.  VOTER  RESERVATION PRICE  INCOME  Kris $100$1000 Taylor $200$5000 Max $700$6000\begin{array} { | c | c | c | } \hline \text { VOTER } & \text { RESERVATION PRICE } & \text { INCOME } \\\hline \text { Kris } & \$ 100 & \$ 1000 \\\hline \text { Taylor } & \$ 200 & \$ 5000 \\\hline \text { Max } & \$ 700 & \$ 6000 \\\hline\end{array} The net social benefit of providing the public good is


A) $100.
B) $700.
C) $900.
D) $1,000.

E) A) and B)
F) A) and C)

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Citizens of Tinytown are considering building a new city park.If each voter in Tinytown has a reservation price that is less than the total cost of the park,then


A) by definition,the benefits of the park are less than the costs and thus the park should not be built.
B) some sort of collective action by voters will be necessary to fund the park.
C) a private firm will have an incentive to build the park.
D) the park will never be built.

E) A) and D)
F) None of the above

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One justification for the creation of a federal level of government is


A) the ability to deficit spend.
B) economies of scale in the provision of military defense.
C) to encourage local diversity in the types of public goods provided.
D) greater responsiveness to the will of the voters.

E) All of the above
F) C) and D)

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A crowded beach without any entrance fee is a ______ good.


A) public
B) private
C) pure public
D) commons

E) A) and C)
F) B) and C)

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The city of Dustin is going to grant an exclusive contract to provide cable TV for the next year.The economic profit of the contract is thought to be $5 million.MegaCable and Acme are competing for the contract.The firm that spends the most on lobbying will be awarded the contract. Suppose MegaCable spends $2,000,002 on lobbying while Acme spends $2,000,001.If both firms know what the other is spending,the expected profit to MegaCable is __________ and to Acme it is __________.


A) $5 million;0
B) $2,999,998;-$2,000,001
C) $2.5 million;$2.5 million
D) $499,998;-$2,000,001

E) A) and D)
F) C) and D)

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Lane and Riley are the only two residents in a neighborhood,and they share the same driveway.They would like to have the driveway paved.The value of the paved driveway is $1500 to Lane and $1000 to Riley.Irrespective of who pays for the paving both people will benefit from it. What is the most a contractor can charge for paving the driveway and still be hired by at least one of them?


A) $1000
B) $1500
C) $2000
D) $2500

E) B) and C)
F) A) and B)

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The demand curve for boxing programs on TV is plotted in the graph below: The demand curve for boxing programs on TV is plotted in the graph below: If viewing the boxing show was free to any consumer who tuned in,what would be the economic surplus? A) $25 million B) $50 million C) $225 million D) $625 million If viewing the boxing show was free to any consumer who tuned in,what would be the economic surplus?


A) $25 million
B) $50 million
C) $225 million
D) $625 million

E) B) and C)
F) All of the above

Correct Answer

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Radio and broadcast television are examples of


A) collective goods.
B) private goods.
C) pure public goods provided by the government.
D) pure public goods provided by private firms.

E) A) and C)
F) A) and B)

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The demand curve for boxing programs on TV is plotted in the graph below: The demand curve for boxing programs on TV is plotted in the graph below: If the regulated pay-per-view charge is $5 per household,what would be the lost economic surplus? A) $25 million B) $50 million C) $225 million D) $625 million If the regulated pay-per-view charge is $5 per household,what would be the lost economic surplus?


A) $25 million
B) $50 million
C) $225 million
D) $625 million

E) A) and B)
F) All of the above

Correct Answer

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Three different voters demand curves for a public park are shown on the graphs below. Three different voters demand curves for a public park are shown on the graphs below. The market reservation price is $14 per acre for a(n) ___ public park A) 2-acre B) 4-acre C) 6-acre D) 8-acre Three different voters demand curves for a public park are shown on the graphs below. The market reservation price is $14 per acre for a(n) ___ public park A) 2-acre B) 4-acre C) 6-acre D) 8-acre The market reservation price is $14 per acre for a(n) ___ public park


A) 2-acre
B) 4-acre
C) 6-acre
D) 8-acre

E) A) and B)
F) A) and C)

Correct Answer

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The state of New Porkswick is one of ten states in the democratic nation of Fatlandia.Each state has ten thousand residents.Although incomes vary,each Fatlandian pays a tax equal to the total cost of all government projects divided by the number of residents in the country.Fatlandia currently has one army base in each of two states and is considering establishing some new ones.An army base adds $250,000 to a state's local economy each year.The total cost of one army base is estimated to be $1,000,000 per year.The increased security of having additional army bases equals $10,000,000 - (3,000,000 * the number of bases) per year. Suppose the department of defense in Fatlandia decides to add two additional bases for a total of four bases and New Porkswick is one of the states that will get a base.The local economy will benefit by ______ per resident,and each resident's taxes will increase by _____.


A) $20;$25
B) $250;$200
C) $25;$20
D) $2.50;$2

E) None of the above
F) A) and B)

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The 20 residents of the village of Towneburg are considering hosting a fireworks show next summer.The total cost of the show is estimated to be $1,000 + $10 per unit.Each resident's demand for fireworks is identical: P = 50 - 2 * units as shown below: The 20 residents of the village of Towneburg are considering hosting a fireworks show next summer.The total cost of the show is estimated to be $1,000 + $10 per unit.Each resident's demand for fireworks is identical: P = 50 - 2 * units as shown below: The residents of Towneburg would be willing to pay a total of _____ for the twenty-fifth unit of fireworks and the marginal cost of providing the twenty-fifth unit is ______. A) $10;$100 B) $0;$10 C) $20;$10 D) $0;$20 The residents of Towneburg would be willing to pay a total of _____ for the twenty-fifth unit of fireworks and the marginal cost of providing the twenty-fifth unit is ______.


A) $10;$100
B) $0;$10
C) $20;$10
D) $0;$20

E) A) and D)
F) All of the above

Correct Answer

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The demand curve for new movies shown on TV is plotted in the graph below: The demand curve for new movies shown on TV is plotted in the graph below: If the new movie is shown for free,what is the economic surplus? A) $4000 million B) $2000 million C) $1280 million D) $720 million If the new movie is shown for free,what is the economic surplus?


A) $4000 million
B) $2000 million
C) $1280 million
D) $720 million

E) None of the above
F) A) and D)

Correct Answer

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If all relevant private and social costs and benefits are included in the demand and supply curves for a particular good,then imposing a tax will


A) only increase the price paid by consumers.
B) only reduce the price received by producers.
C) reduce production and consumption below the efficient level.
D) have no significant effect on price or quantity.

E) A) and B)
F) A) and C)

Correct Answer

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Water flowing in a river is a _____ good,but a single serving bottle of water is a ______ good.


A) public;commons
B) public;private
C) public;collective
D) collective;private

E) A) and D)
F) A) and C)

Correct Answer

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